Andalas Energy applies for first gas-to-power project

Indonesia-focused energy company Andalas Energy and Power announced on Friday that it has submitted an application for its first gas to power project of 2 x 30MW to be included in the Republic of Indonesia’s Electricity Supply Business Plan.

The AIM-traded firm said the application follows the signing of an agreement with PT Pertamina, Indonesia’s national energy company, to fast-track the commercialisation of proven gas fields within Pertamina’s acreage in Sumatra via the roll-out of the company’s gas to power strategy.

It said the project is in line with its strategy to develop a portfolio of small, sub-100 MW independent power producer projects fired with gas from proven fields.

Five IPPs totalling 250-500MW of installed capacity is initially targeted, it said, and the application is the culmination of over four months of intensive work by the Andalas and Pertamina teams.

The submission was completed following a process including the identification and screening of Pertamina’s extensive inventory of discovered gas fields, the assessment of regional electricity demand, grid infrastructure and capacity, gas resources evaluation and modelling, process design, financial modelling, and the completion of a feasibility study for a two x 30 MW project in tandem with the engineering division of PT PLN, Indonesia’s national electricity company

A technical review is scheduled with PLN to obtain the required approval prior to the project being presented to the Energy Minister for final approval for entry of the project onto the RUPTL

Initial preparations and discussions have commenced with major international contractors, the board confirmed, in respect of the front-end engineering and design phase, which will include design and tendering of major services and equipment, and will continue in the New Year with a view towards completion in 2017 ahead of construction.

Andalas said approval will significantly de-risk the project, unlock value and open up multiple funding options including the sale of part of its interest to third parties.

It will be project financed with discussions ongoing with equipment vendors and with the UK export trade agency, the board explained, and expressions of interest had already been received from industry participants and project finance specialists including power companies and power equipment suppliers.

“To have submitted our first gas to power project for inclusion on to the RUPTL within four months of signing a cooperation agreement with Pertamina is testament to the calibre of our management team and its standing within Indonesia’s energy industry,” said Andalas CEO Dave Whitby.

“Approval of our application will be a milestone event for Andalas.

“Together with the Project’s strong economics, fast pay-back and excellent revenue visibility, based on long term gas sales contracts, approval will also act as a value trigger event.”